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Smoodh: Milking a growing market of Dairy beverages

Parle Agro has embarked on a mission to make its flavoured milk Smoodh a Rs 5,000-crore brand by 2025. Launched two years ago, the manufacturer of fruit drinks Frooti and Appy made its re-entry into the dairy beverages market in 2021 with Smoodh, which now has a turnover of Rs 685 crore.

Smoodh is one of the younger brands in India’s flavoured milk market, estimated to grow from Rs 4,160 crore in 2022 to Rs 15,860 crore in 2028 at a CAGR of 25.8% as per an IMARC Group report. The rising popularity, especially among health conscious consumers, has been encouraging, the report notes

In an interview with FE, Nadia Chauhan, joint MD and CMO at Parle Agro, pointed out that Smoodh is targeting rural consumers and that 50% of the brand’s revenues come from rural markets. She said, “We have not only introduced a new category to rural India but also expanded it as a whole.” Earlier this year, the company also introduced its range of fruit smoothies.

Parle Agro is not the only one. Dairy brands in the country such as Amul, Mother Dairy, CavinKare and Parag Milk Foods have also leveraged the growing demand for dairy beverages and are widening their range of offerings. While the value added milk market in India includes other offerings such as cheese, paneer, ghee and yogurt, the beverages segment particularly offers great growth potential. Aside from flavoured milk, other dairy beverages such as lassi, chaas (buttermilk) and milk shakes have become huge individual segments. As per IMARC, the organised lassi market in India touched Rs 3,950 crore in 2022, while the organised buttermilk market was Rs 13,310 crore.

Potential for growth

With many consumers avoiding carbonated soft drinks, the demand for value added milk beverages can only grow — from both rural and urban consumers.
According to the National Dairy Development Board, the per capita consumption of milk in rural areas is higher than in urban areas, which presents a big opportunity for players in the dairy segment. Nikhil Sethi, partner at KPMG in India recommends that given the diverse Indian palate, drawing inspiration from the unorganised, non-alcoholic beverage market could help create flavours that resonate with consumers, especially in rural areas.

He adds, “Functional dairy beverages are gaining popularity as consumers seek products that offer health benefits. Dairy seems more attractive with reduced sugar and fat content options also available. Manufacturers are now reformulating their products to reduce the amount of added sugars and fat, and are also offering milk beverages in smaller, on-the-go packaging to cater to consumers’ busy lifestyles.”

Jayen Mehta, MD at Amul, observes that consumers are increasingly moving away from local and loose, unbranded products, which is helping the market to grow. “The long life beverage portfolio is huge and contributes 25% volume to our dairy product category. It is also our largest distributed ambient product. It has registered double digit CAGR in the last five years and despite Covid-induced interruptions, we managed to maintain sales momentum. The fresh beverage portfolio comprising probiotic buttermilk, lassi and masala buttermilk is also growing rapidly,” says Mehta.

Dairy beverages is one of the fastest-growing categories among the value-added dairy products for Mother Dairy, growing at over 30%. Says Manish Bandlish, managing director, Mother Dairy, “With growing awareness of healthier alternatives, we are constantly on the lookout for opportunities to strengthen our dairy-based beverages portfolio.” The brand has a wide range of lassis, buttermilk, milk shakes flavoured milk and recently added two new offerings in cold coffee for the summer. Milk-based beverages constitute 15% of the company’s value-added dairy products portfolio.

Experts say a big chunk of the demand in the dairy beverage sector will also come from health conscious consumers. “Flavoured milk is a highly palatable, nourishing beverage that can help people, particularly children, meet daily food and calcium intake recommendations,” adds Akshali Shah, executive director at Parag Milk Foods. Aside from lassi, buttermilk and milk shakes, the company also launched a whey-based drink. Parag is eyeing a 10-15% share in the dairy based beverage segment.

Amul’s Mehta says the brand is widening its portfolio with innovative and healthy concepts. “We launched our protein buttermilk and lassi, which provide 15gm protein per pack, and are expanding the protein range to launch products like high protein milk shakes,” he adds.

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